Sabra Health Care REIT’s acquisition pipeline has “increased pretty dramatically” and now stands at $1 billion, Chairman and CEO Rick Matros told participants on a Monday fourth-quarter and full-year 2018 earnings call.

“There is a lot of senior housing in there, primarily senior housing, but we’re starting to see more skilled deals, and that’s where we expect to get some things done this year, and so we expect to see that continue to increase.” he said.

Private equity groups, however, “are still keeping pricing at levels that we think are beyond reasonable” for senior housing, Matros said.

As of Dec. 31, said Talya Nevo-Hacohen, executive vice president, chief investment officer and treasurer, Sabra had more than $1 billion invested in managed senior housing communities, 83% of which was invested in properties managed by Enlivant.

Sabra’s wholly owned Enlivant portfolio includes 11 communities in three states, which “continue to perform very well and outperform forecast,” according to Nevo-Hacohen. Fourth-quarter occupancy in the portfolio was 92.6% compared with 95.6% in the third quarter, but the decline was offset by revenue growth of more than 6%, she said.

“Revenue per occupied unit rose to $5,441, nearly 10% higher than the preceding quarter, which reflects not only the implementation of the 5.5% annual rate increase that was in place in the fourth quarter but also higher effective rates throughout the communities,” Nevo-Hacohen said.

The real estate investment trust also owns 49% of a joint venture with Enlivant that includes 172 properties in 18 states. Average fourth-quarter occupancy in the joint venture portfolio was 81.7% compared with 81.8% in the third quarter.

“Revenue per occupied unit was $4,230, a 5.3% increase over the previous quarter, again reflecting that the annual rate increase in the fourth quarter did not come at the expense of occupancy,” Nevo-Hacohen said.

Sabra and Enlivant has agreed to sell communities owned by the joint venture “where the combination of market, location and physical plant limit the objectives that we, TPG [Real Estate] and Enlivant share,” she said. “In the meantime, we continue to see acquisition opportunities for Enlivant in various markets and are working together to pursue those jointly.”

If the joint venture portfolio performs well, Sabra could exercise an option to acquire the remaining interest in the first quarter of 2020, Matros said.

Other news from the call:

  • Sabra’s master lease with Holiday Retirement is expected to be terminated April 1, with concurrent entry into a management agreement, said Chief Financial Officer Harold Andrews.
  • The previously announced $282.5 million sale of 28 facilities operated by Senior Care Centers is expected to be complete by April 1. Sabra is expected to collect $5.7 million in rent as part of a Feb. 15 settlement agreement with the organization, he said.
  • Sabra sold 15 skilled nursing facilities, two senior housing facilities and one senior housing managed facility during the fourth quarter for gross proceeds of $91.6 million, bringing the REIT’s total aggregate sales in 2018 to 58 assets for total gross proceeds of $382.6 million, Andrews said.

“Our focus for the remainder of the year is to keep the noise behind us, have some quiet time and get some deals done and de-lever the balance sheet,” Matros said.

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